Pentagon auditors caught faking documents

Washington  The Pentagon agency charged with exposing fraud destroyed documents and replaced them with fakes to avoid embarrassment when its own operations were audited, an internal inquiry found.

The incident last year cost the government thousands of dollars and "could adversely affect the confidence of the public" in Defense Department audits, says the report obtained by The Associated Press. The records destruction occurred as the Pentagon inspector general's work was about to be reviewed by Internal Revenue Service auditors part of a routine program where one U.S. inspector general checks the work of another.

The unsuspecting IRS reviewers found "no problems" with the Pentagon's audit work after poring over the phony documents, the internal report said. The document destruction was substantiated in the report, written by an inspector general's employee assigned to investigate her own agency.

"It's a very sad day indeed when the watchdog gets caught cheating," Sen. Charles Grassley, R-Iowa, wrote Defense Secretary Donald Rumsfeld in demanding to know more about the incident. The inspector general's office and the Defense Department public affairs office declined to comment on the incident.

Grassley, chairman of the Senate Finance Committee, began investigating the destruction recently after a Pentagon whistleblower brought it to his attention.

While the inspector general is supposed to root out government fraud and waste, the report said the 983 hours spent creating the fake documents cost taxpayers $63,000.

"As soon as we became aware of the allegation and findings, we immediately withdrew our previous opinion," said David Williams, the inspector general for the IRS. As a result, Pentagon audits must include a disclaimer that the work fails to meet established audit standards.